Difficulties Using Insurance for Psychotherapy

A frequent question I receive from potential new clients wanting individual or couples counseling, is do I take insurance…perfectly appropriate question to ask.  But the answer can get a little complicated — it’s different using insurance for therapy versus other physical health problems where you’re seeing a medical doctor.

Let me help clarify why using your insurance for psychotherapy can be difficult.

In-Network versus Out-of-Network Provider Coverage:

  • An important aspect of understanding how insurance works for therapy, is understanding if your insurance covers out-of-network providers in addition to in-network providers and knowing the difference:
  • In-Network Providers:  
    • means that the insurance company has contracted with a group of therapists who have agreed to offer their services, usually at a discounted rate, so that clients can pay a co-pay (often between $20 – 40/session) and have the rest covered by their insurance company
    • there is often a deductible that you need to pay in full before your insurance company begins paying for treatment, often around $1000 – 5,000 per contract year before they begin paying for therapy beyond your co-pay amount
    • insurance companies also have the right to audit client files for in-network providers so there’s less confidentiality and privacy & there’s often more paperwork to fill out and submit
  • Out-of-Network Providers:
    • there’s a lot more freedom with out-of-network providers because you can basically see any therapist that’s willing to provide you a monthly statement for reimbursement
    • means that the insurance company, usually a PPO plan like Blue Shield/Cross, Aetna, Cigna, United and not an HMO plan like Kaiser, will pay a certain percentage of the cost of a session for therapist outside of their in-network panel
    • what rate they’ll cover and for how many sessions depends on your insurance plan, but usually it’s somewhere between 30% – 80% of whatever full fee they determine is appropriate for the area (usually a fee that is less than the therapist’s normal rate)
    • in this case, the therapist will give you a monthly statement for you to submit directly to your insurance company for reimbursement — therefore, you receive a check directly from the insurance company

Benefits and Drawbacks of Using Insurance for Therapy:

  • Benefits:
    • the most obvious and largest benefit of using your insurance company, is a decreased out-of-pocket expense for you, once your deductible is met
    • many wouldn’t otherwise be able to afford counseling, unless they use their insurance or go to a public health clinic or non-profit agency for lower cost treatment
  • Drawbacks:
    • It’s also important that you’re aware of the drawbacks to using your insurance, especially if you’re choosing an in-network provider.
    • As I mentioned earlier there’s decreased privacy and confidentiality when an insurance company is involved because they require a mental health diagnosis to justify it being medically necessary for you to have therapy.  This stays in your medical record.
    • There’s also increased paperwork and a subsequent paper-trail that stays in your medical record and can be accessed for certain legal court hearings or when applying for things like life insurance.
    • It can sometimes be difficult to determine how many sessions you’ll actually be given per year, as they sometimes require continuing paperwork to justify that therapy is still needed and yet also is effective.
    • Sometimes there’s a care manager that’s involved and determining the course of treatment besides just what the client and therapist deem necessary.

Questions to ask your insurance company, in particular for insurance companies that pay for out-of-network providers:  (It can be helpful later on to get the name of the insurance representative you speak to and record the date/time).

  1. Do they pay for out-of-network providers (i.e. HMO or PPO plan)?
  2. What is your deductible and has it been met?
  3. What percentage of the fee do they cover?
  4. Do they cover the therapist’s full fee or do they determine what a “usual, customary, reasonable fee” (UCR) is for the area your therapist is located in?
  5. How many sessions per year do they pay for?  Do they give you these upfront or do they require you to incrementally ask for more until you reach the maximum amount per year?
  6. When does your insurance coverage for a year begin/end? When do your benefits renew?
  7. Do you need pre-authorization from your primary physician?
  8. What address do you send monthly invoices to?
  9. What is their turn-around time for sending you a reimbursement?

Questions to Ask Your Insurance Company-01

Here’s an NPR Report on how frustrating it can be for both therapist and client to work with insurance:

Here’s a report from KQED:

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